Multiple Valuation of Cost of Goods Manufactured

With this function you can valuate cost of goods manufactured using various accounting principles. The accounting principles determine which valuation approaches are applied

In Asset Accounting and in Cost Center Accounting
For the actual price calculation, and also
For the cost of goods manufactured and the inventory values

Integration

You can use this function if you are using both new General Ledger Accounting and classic General Ledger Accounting. Moreover, it allows you to work with ledgers as well as with parallel accounts.

The following figure illustrates the value flow for the multiple valuation of cost of good manufactured in the relevant functions:

This graphic is explained in the accompanying text.

Value Flow for the Multiple Valuation of Cost of Goods Manufactured

*) Explanatory notes for the figure:

The following applies for the actual costing:

If you generally use actual costs, the periodic costing run posts for the global accounting principle and the alternative valuation run posts for the local and additional accounting principles.
If you generally use standard costs and only use actual costs due to a local accounting principle, the period costing run can also post actual prices from the version for the parallel cost of goods manufactured. Version 0 remains valuated for standard costs.

Prerequisites

You have made the following Customizing settings:

Setup

You have checked the accounting principles and also their assignment to ledger groups (in Customizing of Financial Accounting (New) under Start of the navigation path Financial Accounting Basic Settings (New) Next navigation step Ledgers Parallel Accounting Define Accounting Principles End of the navigation path and also Assign Accounting Principle to Ledger Groups).

I. Versions and Currency and Valuation Profile

You have made the following Customizing settings for both the versions and for the currency and valuation profile:

In Customizing for Controlling, you have made the settings for the versions under General Controlling Organization Maintain Versions .
1. You have checked the settings in version 0 (leading version, for example, according to IFRS).
2. You have created additional versions for the alternative valuation according to local law and additional accounting principles, and defined for the relevant controlling areas that the parallel cost of goods manufactured valuation view 1 to 3 is to be used for these versions. The general settings for using the version, the year-dependent parameters on the controlling area and the settings in the results area are important for this.
In Customizing for Controlling you have checked the settings in the currency and valuation profile, and the settings for the material ledger under General Controlling Multiple Valuation Approaches/Transfer Prices Basic Settings Maintain Currency and Valuation Profile .
In the currency and valuation view, you have defined that in addition to the legal view the parallel cost of goods manufactured valuation view is to be used. The currency types for the company code currency and the group currency are used for the additional versions. These currency types are not used operationally, but are used simply to provide the additional versions in Controlling with values.

II. Transfer of Depreciation to Controlling

So that the depreciation is transferred to Controlling, you have made the following Customizing settings:

You have created the link to Asset Accounting:
1. In Customizing of Financial Accounting (New) you have checked the settings for the transfer of depreciation to general ledger accounting under Asset Accounting Integration with the General Ledger Define How Depreciation Areas Post to General Ledger .
2. You have made sure that the correct account assignment objects of Controlling are posted (in Customizing of Financial Accounting (New) under Asset Accounting Integration with the General Ledger Additional Account Assignment Objects Specify Account Assignment Types for Account Assignment Objects ).
In Customizing for Controlling under Product Cost Controlling Actual Costing/Material Ledger Actual Costing Multiple Valuation of Cost of Goods Manufactured , you have made the following settings:
1. You have checked the transfer of depreciation for assets to Controlling under Transfer Depreciation from Asset Accounting to Controlling.
2. You have made sure that the values from one depreciation area flow into the leading version (version 0) and the values from other depreciation areas (that are not delta depreciation areas) flow into the additional versions (the versions you have created).

Note Note

Although the additional versions in Controlling are technically delta versions, full postings and not delta postings are carried out from Asset Accounting. This means that delta depreciation areas need to be set up in Asset Accounting.

End of the note.

III. Calculating the Cost of Goods Manufactured and Closing Entries

You must have activated the enterprise extension EA-FIN in order to be able to work with the alternative valuation run in the material ledger.

You have to made the following Customizing settings so that you can calculate the cost of goods manufactured in accordance with two accounting principles, and can perform the closing entries:

You have checked the settings in Customizing of Controlling for the activity update and credit of cost centers in the material ledger under Product Cost Controlling Actual Costing/Material Ledger Actual Costing Activate Actual Costing .
Here you have defined that the activity update for the price determination in the material ledger is taken into account, and that the cost centers are credited using the periodic costing run.

If you generally use actual costs, the periodic costing run posts for the global accounting principle and the alternative valuation run posts for the local and additional accounting principles.
In Customizing for Controlling under Product Cost Controlling Actual Costing/Material Ledger Actual Costing Multiple Valuation of Cost of Goods Manufactured , you have made the following settings:
1. You defined in the material ledger those accounting principles for which you want to perform closing entries under Transfer Closing Entries from Material Ledger to Controlling.
  Here you have defined, for example, that the prices of the leading version are included in the periodic costing run and the prices of the additional versions are included in the alternative valuation run. You specified in addition that the closing entries from the periodic costing run should flow into the accounting principle for IFRS, and the closing entries from the alternative valuation flow into the local accounting principle and additional accounting principles.
2. If you are working in general ledger accounting with the account solution, you have specified which accounts are to be posted to under Define Alternative Accounts for Material Ledger Postings.
  
  Note
  As an alternative to this Customizing activity, Business Add-In BAdI: Exchange of Accounts According to Accounting Principle is available.
  
  End of the note.

Features

Asset Accounting and Cost Center Accounting

In Controlling, you can create at additional version that transfers data from additional depreciation areas of Asset Accounting to Cost Center Accounting.

You can analyze costs in the standard reports for Cost Center Accounting by switching between valuation view 0 (legal valuation) and valuation views 5 to 7 (parallel cost of goods manufactured 1 to 3) in the selection screen of the report.

Price Calculation

You perform direct activity allocation (including order confirmation and time recording) based on the planned price for the cost center and the activity type. The activity quantities and the planned prices are also recorded in the material ledger.

To take depreciation into account according to the accounting principles, the prices in the leading version and the additional versions are calculated in parallel at the period end.

Note Note

As direct activity allocation is valuated as usual with the planned prices, you do not need to make changes in Logistics. This involves an enhancement of the actual price calculation for period-end closing, the results of which then flow into the periodic valuation of the material ledger.

End of the note.

You can analyze the prices using the Activity Type Price Report by selecting the leading version once and the additional versions once on the selection screen of the report.

Cost of Goods Manufactured and Inventory Values

You can valuate the material stocks according to different accounting principles using the material ledger. This determines the cost of goods manufactured and the cost of sales in actual at the period end.

The material movements, invoices, and order settlements are also recorded in the material ledger.

Note Note

As the material valuations are made as usual with a standard price, you do not need to make changes in Logistics. You simply supplement the logic of the material ledger, so that in addition to the legal inventory valuation you can make further valuations of the inventories.

Parallel cost of goods manufactured does not support different fiscal year variants for the parallel ledgers.

Actual prices have to be determined based on the activity quantity used, and not on the available capacity, as only in this way can you ensure the production cost centers are credited.

The real-time integration only posts values from the leading version.

End of the note.

Two scenarios are supported:

Scenario 1: Actual costing is used both for the international valuation according to IFRS and for the local and additional accounting principles.
Scenario 2: Actual costing is only used for the valuation according to local accounting principles, while the valuation according to group law continues to be based on standard costs.

Scenario 1: Actual Costing According to International and Local Law

At the period end, you carry out a periodic costing run and up to three alternative valuation runs:

To calculate the cost of goods manufactured using the prices in the leading version, you perform a periodic costing run.
1. Enter a name for the costing run, and select the plants for which you want to perform an actual costing.
2. Carry out the following steps as usual: Selection, Determine Sequence, Single-Level Price Determination, Multi-Level Price Determination,, Revaluation of Single-Level Consumption.
3. In the Post Closing step, the stock postings in the leading ledger or in the global accounts are made. Further, the difference between planned and actual price is calculated, and the cost centers under version 0 are credited. This step is also made for the group valuation and the profit center valuation. This step does not have any effect on the valuation according to alternative accounting principles, however.
To calculate the cost of goods manufactured using the prices in the additional versions, you perform alternative valuation runs. The alternative valuation runs must be indicated as the run for parallel costs of good manufactured and must reference the additional versions in their settings by specifying an accounting principle.
1. Enter a name for each valuation run, indicate the valuation run as a run for parallel cost of goods manufactured, and select those plants for which you want to perform an actual costing.
2. Under Settings, enter the accounting principles for each run.
3. Carry out the following steps as usual: Selection, Cumulate Data, Determine Sequence, Single-Level Price Determination, Multi-Level Price Determination.
4. In the Post Closing step, the stock postings in the ledger or accounts are made with the local or additional accounting principles. Further, the difference between planned and actual price is calculated, and the cost centers under the additional version are credited. This step does not have any influence on the group and profit center valuation.

In each run, you can analyze the results among the costing results. You can see the cost center being credited in the relevant version in the Cost Center Accounting standard reports.

If you want to report inventory values correctly according to the accounting principles, perform the closing entries from all runs in Financial Accounting.

Scenario 2: Actual Costing According to Local Law, Group Valuation According to Standard Costs

In this instance, you only need to create a periodic costing run, and do not need an alternative valuation run. In the Post Close step, the periodic costing run saves the inventory values in the ledger or the accounts with local accounting principles. Further, the system calculates the difference between the plan and actual price, and the cost centers under the additional version are credited.